Many of us prefer to choose a finance option to help us purchase a new car. Car finance means you don’t need a lump sum to have access to a new vehicle and allows you to split the payments into more affordable chunks. But applying for car finance can be daunting, especially if you’ve previously struggled with finance approvals. But don’t worry – this is where car finance for bad credit comes in.
You can choose from a range of options if your credit score is less than perfect, if you’ve previously been bankrupt, or if you need car finance on benefits. Some bad credit lenders base their decision on circumstances and affordability, which makes it easier for those with a low credit score. We’ll take a more in-depth look at this below.
Benefits of choosing car finance
Many of us choose car finance as a way to purchase a vehicle when we don’t have a lump sum to pay the full amount outright. Here are a few benefits of choosing your preferred car finance method:
- Fixed payments: When you enter an agreement with your lender, your monthly payment is fixed which means you’ll be able to budget effectively each month. You don’t have to worry about your payments going up suddenly.
- Build your credit score: If you have a low credit score but you can afford to pay monthly car finance, this can help you build credit. Making the repayments on time and in full means your score should improve.
- Affordable payments: You can choose a finance option that suits you and your budget, so you can benefit from purchasing a car without having to worry about expensive monthly payments.
- No deposit needed: There are some lenders that don’t require a deposit, which means you can choose a finance option to suit you without having to use your savings as a down payment.
What is bad credit car finance?
If you have bad credit, applying for finance can be daunting and you may have found it difficult to be approved for additional finance in the form of loans in the past. Bad credit car finance is an option for those that have struggled to manage their money in the past, whether they’ve defaulted on loans, or have outstanding debt, this type of car finance makes it possible to get approved. Some of these lenders base their decision on affordability, and your unique circumstances.
What do you need to be approved?
So, if you think car finance for bad credit is an option you’d like to pursue, there are a few pieces of information you’ll need to begin your application. The information you’re asked to provide may change depending on the lender you choose but here are some of the most common:
Firstly, you’ll be asked for a few crucial pieces of personal information, like your full name, address, and date of birth. Some form of identification may also be necessary. Then you’ll likely be asked about your employment history and status – this is so your lender can work out whether you could afford to take on a loan and pay it back easily. Depending on your lender, you may be asked for financial information and credit history, this could include income, expenses, debt and defaults or late payments. Providing the information required to your lender in a timely manner means that you could be approved for your loan.
Tips on boosting chances of approval
Now you know that you could get car finance with a bad credit score, knowing how to give yourself the best chance of approval is essential – here are a few tips to help you.
- Check your credit report: Whilst this isn’t essential when applying for a car loan with bad credit, it can be helpful to learn more about your credit score and report. This way, you can take the steps to improve them and put yourself in a better position when it comes to being approved for finance in the future.
- Save for a deposit: Again, some lenders may not ask you for a down payment, but saving for one makes it more likely that you’ll be approved for your chosen car finance agreement. A deposit shows lenders you’re happy to put your own money into the agreement, and the amount you need to borrow could be less as a result.
- Research and compare: Make sure you look at a few lenders before making your decision. You can compare loan agreements, terms, and fees with various online tools so you can apply for car finance with a lender thatsuits you.
- Be honest: It helps to be honest with your lender and provide them with all the correct information they ask for during the process. Being upfront lets them know your situation and allows them to make their decision based on your circumstances. Providing all the required information means your application could be approved more quickly.
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